A lobby group whose members include some of the most well-known names in finance has urged regulators in the US and European Union to agree a coordinated approach to new rules governing the swaps market to prevent severe disruption to cross-border over-the-counter derivatives trading.

Co-chairs of the group are former Goldman Sachs president John Thornton and Glenn Hubbard, former chairman of the US Council of Economic Advisers.

At issue is the lack of coordination between US and European regulators on G20-led reforms to the swaps market, and in particular rules that mandate the clearing of OTC derivatives contracts that can be standardised.

Under the European rules, US clearing houses can only achieve recognition if the CFTC first recognises EU clearing houses. However, the US has only granted equivalence to EU clearing houses for US dealers and not buyside firms, which does not satisfy the European rules.

From December 15, the EU will introduce the Capital Requirements Directive IV, new rules that require EU banks to hold more capital against trades that are not passed through EU-approved clearing houses. Up to 60 times more capital could be required, according to the letter.

According to the letter, if the European Commission does not recognise US clearing houses by December 15, European firms will be forced to process trades only through European clearing houses, which risks “fragmenting the swaps and futures market and decreasing market participants’ access to all cleared derivatives”.

Professor Hal Scott, director of the Committee on Capital Markets Regulation, said in a statement: “We cannot wait until December 14. The time for action is now. Derivative contracts hedge risk over several months, so counterparties will soon be unable to roll-over existing contracts.”

The letter recommends a number of steps the CFTC and European Commission should take to resolve the differences in rules and help achieve recognition. The US and Europe have differing rules covering the amount of collateral paid to clearing houses to guarantee trades, the protection of collateral held at clearing houses and bankruptcy.

Scott added: “If the steps set forth in the letter are taken, then EU-US clearing house recognition is possible, without any undue risk to financial stability. There is no need for an extremely costly disruption of the global derivatives market.”

The letter notes that as the EU and US account for 95% of the $630 trillion global derivatives markets, resolving the problem “would be a very important step towards implementing the post-financial crisis G-20 reforms”.

Both the CFTC and European Commission have acknowledged the need to protect the cross-border swaps market, most notably through the Common Path Forward agreement that was struck between the two regulators in July 2013. But despite the agreement, formal recognition between US and EU swaps rules has not yet been achieved.